FedEx Moves to Simplify Returns

FedEx Corp. is beta testing FedEx Consolidated Return Service, which would simplify the returns process for catalogers and online retailers.

The service would consolidate individual returns that direct marketers and catalogers receive daily into a single, consolidated shipment, FedEx said.

When a consumer returns a purchase, the service automatically decides where the item should be shipped for consolidation. Once the package is received by FedEx, the retailer is notified. The item is held for up to three days so the retailer gets one box with multiple returns.

FedEx will use its FedEx deferred ground service, which delivers in three to five days, to keep the cost down. Pricing for direct marketers would be an implementation fee plus a flat per-piece transaction fee.

Analysts called the system a good development for FedEx because it lets the company lower its handling costs while moving the same number of packages. However, Satish Jindel, a transportation consultant at SJ Consulting Group in Pittsburgh, cautioned that catalogers must use the service intelligently for it to pay off.

"It may be more important for a cataloger to get their returned merchandise back sooner, rather than from week to week, especially if they are planning to resell that merchandise," he said. "Therefore, catalogers should make sure they plan ahead and use the system appropriately."

Meanwhile, FedEx awaits the next steps in two lawsuits it is involved in.

The FedEx Express unit expects the U.S. Court of Appeals for the 9th Circuit to rule on an appeal of a class-action judgment in 12 to 18 months. The class-action lawsuit was filed in U.S. District Court in San Diego against FedEx Express, alleging that customers who had late deliveries during the 1997 Teamsters strike at United Parcel Service Inc. were entitled to a full refund of shipping charges under a money-back guarantee, regardless of whether they gave timely notice of their claim.

At the hearing on the plaintiffs' motion for summary judgment, the court ruled against FedEx Express and ordered a judgment totaling about $68 million, including interest and fees for the plaintiffs' attorney. FedEx has denied any liability for this claim.

Separately, an Illinois state court granted preliminary approval to a settlement of an Illinois fuel surcharge class-action lawsuit against the company.

The lawsuit alleges that FedEx Express imposed a fuel surcharge counter to the terms and conditions of its contracts with customers. Under the proposed settlement, the company would issue coupons to qualifying class members toward the purchase of future FedEx Express shipping services. The coupons would be subject to terms and conditions and would be redeemable for one year after they are issued.

A hearing to consider any objections and to approve the settlement is expected by the end of December, the filing said.